Shalala v. Guernsey Memorial Hospital, 514 U.S. 87, 14 (1995)

reimbursement, to provide payment of the necessary costs
of efficient delivery of covered services to Medicare beneficiaries, may not be identical to the objective of financial
accounting, which is "to provide useful information to management, shareholders, creditors, and others properly interested" and "has as its foundation the principle of [financial]
conservatism." Thor Power Tool Co. v. Commissioner, 439
U. S. 522, 542 (1979) (rejecting taxpayer's assertion that an
accounting principle that conforms to GAAP must be presumed to be permissible for tax purposes). The Court
makes this argument as well. See ante, at 100-101.

Reading the regulations to employ GAAP, even though it
is possible that the relevant reimbursement standard will
change over time as the position of the accounting profession
evolves, does not imply an abdication of statutory authority
but a necessary invocation of an established body of accounting principles to apply where specific regulations have not
provided otherwise. The Secretary is, of course, not bound
by GAAP in such a situation and, indeed, has promulgated
reimbursement regulations that depart from the GAAP
default rule in specific situations. Compare, e. g., § 413.134
(f)(2) (limited recognition of gain or loss on involuntary conversion of depreciable asset) with R. Kay & D. Searfoss,
Handbook of Accounting and Auditing, ch. 15, p. 14 (2d ed.
1989 and 1994 Supp.) (gains or losses are recognized under
GAAP in the period of disposal of a depreciable asset, even
if reinvested in a similar asset). The Secretary would also
be free to devise a reimbursement scheme that does not involve GAAP as a background principle at all if she believes,
as the Court argues, that use of GAAP binds her to a cost
allocation methodology ill suited to Medicare reimbursement,
see ante, at 101. Our task is simply to review the regulations the Secretary has in fact adopted, and I conclude that
the Secretary has incorporated GAAP as the reimbursement
default rule.